Allison Corporation acquired all of the outstanding voting stock of Mathias, Inc., on January 1, 2017, in exchange for $5,957,000 in cash. Allison intends to maintain Mathias as a wholly owned subsidiary. Both companies have December 31 fiscal year-ends. At the acquisition date, Mathiass stockholders equity was $2,020,000 including retained earnings of $1,520,000.

At the acquisition date, Allison prepared the following fair value allocation schedule for its newly acquired subsidiary:

Consideration transferred					$	5,957,000
Mathias stockholders' equity						2,020,000
Excess fair over book value					$	3,937,000
to unpatented technology (8-year remaining life)	$	832,000
to patents (10-year remaining life)		2,540,000
to increase long-term debt (undervalued, 5-year remaining life)		(120,000	)			3,252,000
Goodwill					$	685,000

Post-acquisition, Allison employs the equity method to account for its investment in Mathias. During the two years following the business combination, Mathias reports the following income and dividends:

	Income		Dividends
2017	$	472,500	$	25,000
2018		945,000		50,000

No asset impairments have occurred since the acquisition date.

Individual financial statements for each company as of December 31, 2018, appear below. Parentheses indicate credit balances. Dividends declared were paid in the same period.

	Allison				Mathias
Income Statement
Sales	$	(6,480,000	)		$	(3,920,000	)
Cost of goods sold		4,556,000				2,513,000
Depreciation expense		895,000				289,000
Amortization expense		440,000				109,000
Interest expense		63,000				64,000
Equity earnings in Mathias		(611,000	)			0
Net income	$	(1,137,000	)		$	(945,000	)
Statement of Retained Earnings
Retained earnings 1/1	$	(5,380,000	)		$	(1,967,500	)
Net income (above)		(1,137,000	)			(945,000	)
Dividends declared		560,000				50,000
Retained earnings 12/31	$	(5,957,000	)		$	(2,862,500	)
Balance Sheet
Cash	$	81,000			$	149,000
Accounts receivable		970,000				235,000
Inventory		1,740,000				805,000
Investment in Mathias		6,631,500				0
Equipment (net)		3,740,000				2,066,000
Patents		105,000				0
Unpatented technology		2,145,000				1,470,000
Goodwill		439,000				0
Total assets	$	15,851,500			$	4,725,000
Accounts payable	$	(694,500	)		$	(162,500	)
Long-term debt	$	(1,000,000	)		$	(1,200,000	)
Common stock		(8,200,000	)			(500,000	)
Retained earnings 12/31		(5,957,000	)			(2,862,500	)
Total liabilities and equity	$	(15,851,500	)		$	(4,725,000	)

Required:

Determine Allison's December 31, 2018, Investment in Mathias balance.

Prepare a worksheet to determine the consolidated values to be reported on Allisons financial statements.